Note Payable Issued in Exchange for an Asset On January 1, 2007 the Sanders Corporation purchased equipment having a fair value of $68,301.30 by issuing a non interest bearing, $100,000, four year note due December 31, 2010.
Required
Prepare the journal entries to record (1) the purchase of the equipment, (2) the annual interest charges over the life of the note, and (3) the repayment of the note. E14 22 Note Payable in Installments On January 1, 2007 the Billips Corporation purchased equipment having a fair value of $72,054.94 by issuing a $90,000 note, payable in three $30,000 annual installments beginning December 31, 2007. Required
Prepare (1) the journal entry to record the purchase of the equipment, (2) a schedule to compute the annual interest expense, and (3) the journal entries to record yearly interest expense and note repayments over the life of the note.